Microsoft cuts 4,800 jobs as Xbox division faces mounting challenges

Tech giant Microsoft has announced plans to cut 4,800 jobs, representing about 2.1 percent of its global workforce, with a significant number of the layoffs affecting its Xbox gaming division.

According to the company, about 1,600 employees in the Xbox business have been laid off as part of a broader restructuring aimed at repositioning the gaming unit amid growing competition in the industry.

Microsoft also indicated that additional job cuts are expected later this year as it continues efforts to "reset" the Xbox business.

In a memo to employees, Xbox CEO Asha Sharma acknowledged the challenges facing the division.

"Our business today is not healthy," Sharma wrote.

"We are operating at margins that are 3-10x lower than comparable platform and publishing businesses."

She explained that the gaming industry is currently facing a severe hardware crisis, with rising costs for console components putting pressure on manufacturers.

Xbox competes directly with Sony's PlayStation and Nintendo's Switch in the global video game console market.

The latest round of layoffs reflects the wider challenges confronting the gaming industry as companies grapple with slowing hardware sales, rising production costs, and increased competition.